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Hong Kong Proposes New Rules for Company Ownership Transparency

The Hong Kong government is proposing new regulations that will require companies to disclose information about their beneficial owners, in an effort to prevent money laundering and terrorist financing.

Background

Under the proposed rules, companies will be required to keep a public register of significant controllers (PSC), which will include details of authorized individuals or designated non-financial business and professional services providers who can provide further assistance to law enforcement agencies when needed. Companies will have the option to choose between authorizing a natural person resident in Hong Kong or a locally-based designated non-financial business and professional service provider, such as an accountant or solicitor.

Key Features

  • The PSC register will be available for inspection by any member of the company or person on the register without charge, or by other members of the public upon payment of a fee at the company’s registered office or another place in Hong Kong determined by the company.
  • The government believes that this balance between transparency and privacy is crucial to maintaining a competitive business environment.

Proposed Sanctions

However, the proposed rules also include criminal sanctions for non-compliance, with: + Fines up to $25,000 + Daily fines of $700 for failure to keep the PSC register or make it available for public inspection + Imprisonment and fines of up to $300,000 for individuals who knowingly or recklessly make false statements in the PSC register

Public Input Sought

The government is seeking public input on several aspects of the proposed rules, including:

  • Whether companies should be given the choice to meet the requirement of nominating a person for cooperation with law enforcement agencies by authorizing a natural person resident in Hong Kong or a local designated non-financial business and professional service provider.
  • The proposed manner of keeping the PSC register (i.e. at the registered office of a company or another place in Hong Kong).
  • Whether the PSC register should be available for public inspection, or only accessible to competent authorities.

Consultation Period

The consultation period is open until [date]. Members of the public are invited to submit their views on the proposed rules and sanctions.